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The influence of culture on the relationship betweenthe entrepreneur’s social identity anddecision-making: Effectual and causal logic

M. EstradaCruz ∗, A.J. VerdúJover, J.M. GómezGras

Economics and Financial Studies Department, Miguel Hernández University of Elche, Avenida Universidad S/N, 03202 Elche, Spain

Received 19 February 2018; accepted 19 October 2018

JELCLASSIFICATIONL26;M130;M10

KEYWORDSEffectual logic;

Abstract Entrepreneurs’ actions and attitudes towards business decisions are fundamentalto new ventures. Building on Fauchart and Gruber (2011), which identifies three types ofentrepreneurial social identity (Darwinian, communitarian, and missionary), this study analyzeshow these identities influence use of effectual and causal logic, while also explaining the effectof the culture of the country in which the entrepreneurship initiative is developed. Based on asurvey of 5076 founders who created their own venture, the results support the conclusion thatthe cultural dimensions defined as avoiding uncertainty, individualism, long term orientation,and distribution of power influence decisions made using effectuation.

Causal logic;Social identity;Cultural dimensions

© 2018 ACEDE. Published by Elsevier Espana, S.L.U. This is an open access article under the CCBY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

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Introduction

New firm creation and the way entrepreneurs work tomaintain and grow new firms have been researched exten-sively (Davidsson, 2004). Two schools of thought focus onhow entrepreneurs create a business and the processes bywhich they do so (Brinckmann et al., 2010). The first schoolshows that entrepreneurs establish businesses using plannedexploration and exploitation of opportunities (Bhave, 1994;

Please cite this article in press as: EstradaCruz, M., et al.,the entrepreneur’s social identity and decision-making: Ehttps://doi.org/10.1016/j.brq.2018.10.002

∗ Corresponding author.E-mail address: [email protected] (M. EstradaCruz).

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https://doi.org/10.1016/j.brq.2018.10.0022340-9436/© 2018 ACEDE. Published by Elsevier Espana, S.L.U. This iscreativecommons.org/licenses/by-nc-nd/4.0/).

hane and Venkataraman, 2000). The second stresses themergent nature of entrepreneurship as bricolage (Bakernd Nelson, 2005), effectuation (Sarasvathy, 2001), andmprovisation (Hmieleski and Corbett, 2006). Among emerg-ng views, effectuation, as described by Sarasvathy (2001,008), provides a highly perfected theoretical frameworkor understanding entrepreneurial processes (Read et al.,009).

For Sarasvathy (2001), all entrepreneurs begin with threeategories of means: who they are----their traits, tastes,

The influence of culture on the relationship betweenffectual and causal logic. BRQ Bus. Res. Q. 2018,

nd skills; what they know----their education, training, andxperience; and whom they know----their social and profes-ional networks (Sarasvathy, 2001). Research demonstrates

an open access article under the CC BY-NC-ND license (http://

https://doi.org/10.1016/j.brq.2018.10.002


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ARTICLERQ-110; No. of Pages 19

he importance of prior knowledge and social networks forusinesspeople who create new firms and markets (Shane,000; Hite and Hesterly, 2001; Wiklund and Shepherd, 2003).he first category----who entrepreneurs are----requires morettention, as it influences how they do things and thus theiray of tackling entrepreneurship (Sarasvathy, 2001, 2008).

Sarasvathy (2001) argues that entrepreneurs often use aundamental aspect of their identity to explain their actionsnd decisions. They state that a person’s identity leadsim/her to prefer certain processes and ways of living andeciding. This identity may be fictitious or real, freely cho-en or socio-culturally constructed (Sarasvathy, 2001).

Culture is an important aspect of identity. Since an indi-idual’s personality and behavior are connected to his/herational culture of origin (Berger, 1991), businesspeoplerom different cultures may have different preferencesithin the effectuation-causality perspective when creatingew business ventures.

The idea that identity (‘‘who I am’’) is a mean thatarasvathy (2001) proposes as fundamental to explainingntrepreneurs’ actions and decisions generates two researchuestions: Could founders’ different identities be related tose of effectual or causal focus in decision-making? If so,ould the culture of the country in which the founder livesave a significant effect on this relationship?

Since national culture influences entrepreneurial spiritignificantly (Zahra, 2007), we expect entrepreneurs andheir decision-making frameworks to be influenced by theifferent dimensions composing national culture (Thomasnd Mueller, 2000).

Our study aims to contribute to the literature in var-ous ways. First, based on data from current literature,e theorize how different entrepreneurial social iden-

ities shape business behavior identified as effectual orausal. Since the entrepreneurial social identity litera-ure lacks empirical data, our study advances knowledgen this field. Second, authors like Perry, Chandler, andarkova (2012) call for studies that develop more in-epth knowledge of the antecedents of effectual andausal behavior. This study advances such knowledge fromhe issue of the entrepreneur’s social identity as a fac-or shaping entrepreneurial behavior. Third, we providereater understanding of entrepreneurs as a heterogeneousocial group, since the literature stresses the role differ-nt social identities (Darwinian, communitarian, missionary)lay in analyzing changing motivations, goals, and behav-or. Our study also develops more in-depth knowledge ofntrepreneurs and their actions.

Our analysis is organized as follows. First, we review theiterature on the study variables and justify the hypotheses.ext, we explain the data collection process and valida-ion of the variables, and contrast the research hypotheses.inally, we present the results obtained and explain the mainonclusions, implications for management, limitations, anduture lines of research.

ypotheses

Please cite this article in press as: EstradaCruz, M., et al.the entrepreneur’s social identity and decision-making: Ehttps://doi.org/10.1016/j.brq.2018.10.002

ffectuation Theory is currently one of the most significanterspectives in entrepreneurship research (Fisher, 2012;erry et al., 2012). Considering this theoretical framework,

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ffectual logic views the entrepreneurial process as a set ofiven means that can be combined into a range of possibleffects. Within this theory, individual identity is tradition-lly perceived as one precondition or means that initiateshe entrepreneurial process. In entrepreneurship research,dentity is a relatively stable prior condition influencinghe way business owners organize their preferences andake decisions in the uncertain situation of entrepreneur-

hip (Sarasvathy and Dew, 2005).According to Effectuation Theory, individuals have a rel-

tively clear, coherent perception of who they are from thetart of the entrepreneurial process and act based on thiserception (Sarasvathy, 2001).

Breaking with the assumption of preexisting opportuni-ies, markets, etc., Effectuation Theory (Sarasvathy, 2001,008) focuses on how business owners face the challengef designing business spirit when they have limited means,he situation is unpredictable, and there are no pre-existingoals. Sarasvathy (2001, 2008) distinguishes between twolternative decision-making logics: effectuation and cau-ation. Causal thinking views rational decision-making asossible and desirable through focus on a predefined plan.nformation is complete and a general view of the alter-atives/consequences of a successful firm available. Causalogic includes elements of strategic planning, as its goals to predict an uncertain future (Mintzberg, 1978; Ansoff,979). As a decision-making logic, causality combines strictbjective orientation (Bird, 1989) with focus on maxi-izing profit (Friedman, 1953) and competitive analysis

Dutton and Ottensmeyer, 1987). Business owners who applyon-predictive control (effectuation) use different princi-les (Sarasvathy, 2001, 2008; Read and Sarasvathy, 2005;arasvathy and Dew, 2005). These principles include creat-ng something new beginning with the resources availableintellectual, human, and social capital), limiting losses ton assumable level, creating prior agreements, and let-ing plans evolve while developing them. In this theoreticalramework, effectual logic (rather than planning and pre-iction techniques----aspects of causal logic) to increase theobustness of business ventures facing contingencies focusesn control strategies such as flexibility and experimenta-ion to create new products and markets (Sarasvathy, 2001,008). Effectuation is thus a more proactive and emergentay of dealing with uncertain environments by applying logi-al reasoning to control the environment. Sarasvathy’s studyated on 2008, started from a set of means the individualossesses, of which identity is a fundamental part.

The context of research on business spirit shows growingnterest in identity as fundamental to the entrepreneurialrocess (Down and Warren, 2008; Shepherd and Haynie,009; Hoang and Gimeno, 2010). In the context of businessnitiatives, identity indicates a self with a relatively stableore that determines behavior.

In the entrepreneurial framework, as in other domains,dentity is a complex construct whose multidisciplinaryoots link it to a series of conceptual meanings and theoret-cal roles. Understood as internalization and incorporationf socially sustained behavioral expectations, identity

, The influence of culture on the relationship betweenffectual and causal logic. BRQ Bus. Res. Q. 2018,

an have a significant impact both on how we feel, thinknd behave (present) and on what we aim to achievefuture) (Obschonka et al., 2012). Individuals with anntrepreneurial identity want and need to distinguish


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ARTICLEBRQ-110; No. of Pages 19

Culture in the entrepreneur’s identity: Influence on effectua

themselves from other members of society (Shepherd andHaynie, 2009), but they also experience the basic psycho-logical need to belong to a group (Tajfel and Turner, 1986).According to Social Identity Theory, people define them-selves as members of a group with attributes significantlydifferent from those of another, external group (Tajfel andTurner, 1986). Since new venture creation is an inherentlysocial activity, entrepreneurs shape their behavior basedon how others perceive them (Fauchart and Gruber, 2011).

Various studies relate the concept of social identityto use of Effectuation Theory (Nielsen and Lassen, 2012;Alsos et al., 2016; York et al., 2016). For Nielsen andLassen (2012), this theory has little explicit discussion ofhow identity unfolds and changes when developing a busi-ness. Alsos et al. (2016) study how the entrepreneur’ssocial identity influences his/her behavior in forming newcompanies. Finally, York et al. (2016) study why and howindividuals engage in environmental entrepreneurship. Theirfindings contribute to the literature on hybrid organizations,social identity, and entrepreneurship on environmentaldegradation. These studies stress the importance of theentrepreneur’s identity in new venture creation but do notconsider the effect of the culture of the country where theentrepreneur establishes the business.

Considering these studies and the person’s social iden-tity as a cognitive framework for interpreting experiencesand options for behavior, social identity explains dif-ferent entrepreneurial behaviors (Fauchart and Gruber,2011). Entrepreneurs’ social identity significantly impactsthe type of opportunity they exploit (York et al., 2016;Laskovaia et al., 2017; Wry and York, 2017), the strate-gic decisions they consider appropriate, and the valuecontribution of their new ventures (Fauchart and Gruber,2011). The typology of entrepreneurial social identities isbased on types identified by Fauchart and Gruber (2011):‘‘Darwinian,’’ ‘‘communitarian,’’ and ‘‘missionary.’’ Thethree identities span the logical spectrum of purelyfounding identities, reflecting their social relationshipsconsidering their personal and symbolic interaction withothers.

Darwinian entrepreneurs are driven by economic bene-fits and make decisions mainly to establish strong, profitablenew ventures. This strong interest in profits leads them tostart business activity by studying the knowledge of tech-nicians and enterprises available in the market to developa competitive new venture (Fauchart and Gruber, 2011).This orientation to well-defined goals is related to causaldecision-making, as it assumes a series of ends it wishesto achieve and bases decision-making on evaluation ofexpected returns (Alsos et al., 2016).

Communitarian identity resembles the concept of ‘‘userentrepreneur’’ (Shah and Tripsas, 2007), in which usersstumble on ideas through their own use and share themwith the community. This process involves collective cre-ative activity before creation of business ventures in thecommunity of users (Alsos et al., 2016). Its focus on prod-ucts and development of businesses due to personal interestis close to effectual conduct, particularly to the principle of


starting with means, basing the firm on ‘‘who I am’’ and‘‘what I know’’ (Sarasvathy and Dew, 2005; Alsos et al.,2016). As this identity is linked strongly to the social groupto which founders belong, founders make decisions based on

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‘who they are,’’ taking their reference group----their socialdentity----into account.

The missionary identity is closely related to socialntrepreneurship (Bacq and Janssen, 2011). Entrepreneursith a missionary identity hold strong beliefs in their firm as

vehicle for changing some aspects of society (Fauchart andruber, 2011). In this assessment, social entrepreneurs makeignificant contributions to their communities and societiesy adopting business models to provide creative solutionso complex social problems (New York University’s Sternchool, 2005) in ambiguous, uncertain markets. For Dew andarasvathy (2007), effectual logic provides useful criteria forction in uncertain markets. Missionary entrepreneurs aredentified, however, by strong beliefs in their company as aehicle to change an aspect of society (Alsos et al., 2016).hey see their companies as platforms for pursuing theirocial goals (Fauchart and Gruber, 2011). Although such goalrientation does not focus on benefit or expected return inhe classical sense, the causal principle of making the end

basis for action is close to adoption (Alsos et al., 2016).his identity thus combines the two decision-making logics:ffectual logic (faces environments with intense uncer-ainty) and causal logic (is clearly oriented to achieving axed social and/or environmental goal).

Based on the foregoing, Social Identity Theory helps uso understand and explain the heterogeneous processes usedo set up a new business initiative. Although different the-retical models can help, Effectuation Theory (Sarasvathy,001) is useful to analyze social identity’s repercussions forntrepreneurial decision-making.

Based on the foregoing, we propose that Darwinian iden-ity is positively related to causal logic, as it pursuesn ultimate goal through focus on planning to iden-ify what benefits the business. Such benefit requireseticulous analysis of product and market characteristicsefore decision-making. Communitarian identity, in con-rast, focuses on business products and development basedn personal interest, as does to effectual behavior, infer-ing utility over other interests. Communitarian identity ishus positively related to effectual logic. Finally, mission-ry identity emphasizes social goals. Given the complex,ncertain nature of these environments, effectual logic pro-otes action in complex situations with more intervening

gents. Yet it also uses its new venture as a vehicle throughhich to make decisions to achieve the entrepreneur’s pre-stablished objectives. This behavior may also be closelyelated to the use of causal logic. Based on the theoreticalramework analyzed, we propose the following hypotheses:

1. Darwinian identity is negatively related to effectualogic and positively related to causal logic.

2. Communitarian identity is positively related to effec-ual logic and negatively related to causal logic.

3. Missionary identity is positively related to both effec-ual and causal logic.


he influence of culture on Effectuation Theory

nalysis of the relationship between a country’s culturend business activity is driven by economists (Schumpeter,


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934), sociologists (Weber, 1930), and psychologistsMcClelland, 1961), as countries have different levels ofusiness activity. Since business activities are considereds a source of technological innovation (Schumpeter,934) and economic growth (Birley, 1987), understandinghe influence of national culture on business spirit is ofheoretical and practical value. Culture is defined as a setf shared values, beliefs, and expected behaviors (Herbig,994; Hofstede, 1980).

Following seminal studies (Shane et al., 1991; Shane,993; Davidsson, 1995) and Hayton et al. (2002), theesearch analyzed here shows three broad streams onational culture and entrepreneurship. The first focusesn the impact of national culture on aggregate measuresf entrepreneurship, such as national innovative output orew businesses created. The second studies the associa-ion of national culture with the characteristics of individualntrepreneurs. Here, researchers examine values, beliefs,otivations, and cognitions of entrepreneurs across cul-

ures. The third stream explores the impact of nationalulture on corporate entrepreneurship. The second streamrounds scholarly acceptance that cultural values shapehe individual’s cognitive schemes, programming consis-ent behavioral patterns in the cultural context (Linánnd Fernandez-Serrano, 2014; Hofstede, 2003). In Effec-uation Theory, entrepreneurial behavior and action areuided by effectual decision making (Sarasvathy and Dew,005). The theory is thus based on asserting that individ-als make decisions according to their perceptions of theevel of uncertainty and predictability in the environmentSarasvathy, 2001).

Culture, defined as the underlying system of values pecu-iar to a specific group or society (Mueller and Thomas,001), motivates individuals in one society to engage inehaviors that may not be seen in others. Various authorsBusenitz et al., 2000; George and Zahra, 2002; Muellert al., 2002) view culture as moderating between economicnd institutional conditions, and entrepreneurship (Linánnd Chen, 2009).

Based on the study by Laskovaia et al. (2017) we con-ider four main approaches used in the entrepreneurshipiterature to operationalize national culture empirically:

-- Global Leadership and Organizational Behavior Effective-ness (GLOBE) Project (House et al., 2004). Investigatesthe role of 9 cultural dimensions in social life: per-formance orientation, uncertainty, avoidance, in-groupcollectivism, power distance, gender egalitarianism,humane orientation, institutional collectivism, future ori-entation, and assertiveness.

-- Schwartz’s Survey of Values (Schwartz, 1992, 1994, 1999).Assumes 7 value types for intercultural comparison:embeddedness, intellectual autonomy, affective auton-omy, hierarchy, mastery, egalitarianism, and harmony.

-- World Values Survey. Analyzes a large variety of people’svalues and beliefs on policies, religion, national iden-tity, environment, family, and economic and social life(Inglehart, 1990, 2006).


-- Hofstede’s cultural dimensions’ framework (Hofstede,1980, 2001; Hofstede et al., 2010). An approachcomposed of 6 main cultural attributes that affectbehavioral patterns: individualism/collectivism, power

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distance, uncertainty avoidance, masculinity/femininity,long-term/short-term orientation (STO), and indulgence.

The literature debates these approaches considerably.ome scholars stress level-of-analysis confusion, arguinghat nation and culture scores cannot be used to character-ze individuals (Brewer and Venaik, 2012; Venaik and Brewer,013). Tung and Verbeke (2010) have published much anal-sis of conceptual and methodological issues on Hofstede’seuvre vs. the GLOBE project’s cultural dimensions.

Based on Saleem and Larimo (2017), scholars from var-ous disciplines favor Hofstede’s framework because of itslarity and parsimony in measuring culture (Kirkman et al.,006). Comparisons of these dimensions to other approacheso culture show greater convergence among them, support-ng theoretical association with Hofstede’s dimensions andustifying their use (Soares et al., 2007). In the 2001 editionf Culture’s Consequences, Hofstede documents that cultu-al dimension scores correlate closely with over 400 societalhenomena and tend not to weaken over time. ‘‘[T]he IBMorporation dimension scores have remained as valid in 2010s they were around 1970, indicating that they describeelatively enduring aspects of these countries societies’’Hofstede et al., 2010, p. 39).

Many definitions of culture exist (Taras et al., 2009;hanchani and Theivanathampillai, 2002), and they differy research field (e.g., sociology, anthropology, the human-ties). Sociological analysis defines culture as a pattern ofhared values, beliefs, and behaviors of a group of peo-le (Hofstede, 1998), since, as stated above, behavior andction are guided by effectual decision making (Sarasvathynd Dew, 2005). Various definitions share these elements.ofstede (2001) treats culture as ‘‘collective programmingf the mind that distinguishes the members of one group orategory of people from another’’ and explains that ‘‘mind’’tands for thinking, feeling and acting.

Cultural values are also likely to determine ‘‘the degreeo which a society considers entrepreneurial behaviors, suchs risk taking and independent thinking, to be desirable’’Hayton et al., 2002, p. 33). The relationship betweendentity and behavior has long been a key question inocial psychology (Burke and Reitzes, 1981) and has recentlyntered the field of entrepreneurship (Hoang and Gimeno,010; Fauchart and Gruber, 2011; Powell and Baker, 2014;ieger et al., 2016; Alsos et al., 2016; Kromidha and Robson,016). Sieger et al. (2016) propose that the research on iden-ity formation is valuable in improving understanding of hownd why cultures differ in their conception of social oth-rs, particularly since ‘‘the self is shaped, in part, throughnteraction with groups.’’ (Triandis, 1989, p. 506). Triandis1989) argues that the self is shaped by cultural variables,ncluding the complexity of the culture a person lives in,ts individualistic or collectivistic nature, and its homogene-ty or heterogeneity. We thus assume that national culturenfluences entrepreneurial social identity.

Cultures can be characterized using distinct dimensions.he literature proposes many sets of classificatory dimen-


ions (e.g., Inglehart and Baker, 2000; House et al., 2002).xtensive use of Hofstede’s dimensions in the last threeecades in both theoretical and empirical research arguesheir use as a well-grounded approach to describing culture


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as used in this article. We analyze five dimensions1 to deter-mine their impact on decisions about effectual and causallogic.

Avoiding uncertaintyHofstede defines avoiding uncertainty as ‘‘the extent towhich the members of a culture feel threatened by uncertainor unknown situations’’ (Hofstede, 2001, p. 161). Businessowners in cultures with low propensity to this dimensiontend to exploit any relationship based on their close net-works. Business owners in cultures with higher propensity toavoid uncertainty are more likely to persist with trust basedon established relationships, despite the threat perceived inthe environment.

We thus assume that avoiding uncertainty impactsdecision-making with effectual logic. A major principleof Effectuation Theory (Sarasvathy, 2001) is ‘‘affordableloss,’’ which focuses on projects where loss in a worst-case scenario is affordable (effectuation) vs. maximizationof expected returns (causation) (Chandler et al., 2011). Thisconclusion leads us to affirm that effectual entrepreneurstry to avoid taking risks in their ventures, whereas causalentrepreneurs calculate the possible risks in advance tomeasure the expected returns. Hence, this dimension couldonly influence the effectual decision-making. Based on theforegoing, we formulate the following hypothesis:

H4. A culture characterized by avoiding uncertainty inten-sifies the relationship between the entrepreneur’s socialidentity and the use of effectual logic but does not affectthe relationship between the entrepreneur’s social identityand the use of causal logic.

IndividualismIndividualism stands for a society in which the ties betweenindividuals are loose: Everyone is expected to look afterhim/herself and her/his immediate family only. Collectivismstands for a society in which people from birth onwards areintegrated into strong, cohesive in-groups, which through-out people’s lifetime continue to protect them in exchangefor unquestioning loyalty’’ (Hofstede, 2001, p. 225). Coun-tries with low individualism use alliances or associations. Inmore collectivist cultures (less individualism), knowing theright people is most important, whereas individual capa-bility is most important in cultures that score high forindividualism (Hofstede, 2001). Based on Effectuation The-ory, the types of means available to ground effectual logicare fundamental to the process. The first type includes theindividual’s stable abilities and attributes; the second arehis/her education, experience, and unique skills; the thirdis his/her social network (Sarasvathy, 2001, 2008). Causalentrepreneurs tend to focus more on competitive analy-


sis, and effectual entrepreneurs more on alliances with thesocial group/network as means for launching a new ven-ture. Since countries with high collectivism are associated

1 Of the six dimensions developed by Hofstede, we will not ana-lyze ‘‘indulgence,’’ discovered and described in collaboration withMichael Minkov, since it is relatively new and thus has less data avail-able. Additionally, we do not find indulgence to be theoreticallylinked to the dependent variables.

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ith use of alliances or associations, individualism in a soci-ty may influence decisions based on effectual logic butot mediate use of causal logic. We can thus formulate theollowing hypothesis:

5. A culture characterized by individualism intensifies theelationship between the entrepreneur’s social identity andhe use of effectual logic but does not affect the relationshipetween the entrepreneur’s social identity and the use ofausal logic.

istribution of poweristribution of power (PDI) is the degree to which individualsccept and expect power in organizations and institutions toe distributed unequally (pluralist vs. elitist). Cultures withigh PDI have unequal distribution of power, strong hierar-hies, control mechanisms, and emphasis on deferring tond obeying imposition of power (Hofstede, 1980). Busenitznd Lau (1996) argue that high PDI promotes entrepreneurialctivity. Mitchell et al. (2000) find that PDI influencesrrangement, ability, and behavior cognitions, which in turnffect decisions to start up. As effectual entrepreneursre guided by their behavior and action (Sarasvathy andew, 2005), this cultural dimension may influence effectualecision-making. Entrepreneurs who use causal decision-aking seek to carry out a series of planned actions. Theirecision-making is not adaptable to environmental circum-tances. Based on the foregoing, we propose the followingypothesis:

6. A culture characterized by high PDI intensifies the rela-ionship of the entrepreneur’s social identity to the use offfectual logic but does not affect the relationship betweenhe entrepreneur’s social identity and the use of causalogic.

asculinity ‘‘masculine’’ society expects men ‘‘to be assertive, tough,nd focused on material success; women are supposed toe more modest, tender, and concerned with the quality ofife’’ (Hofstede, 1998, p. 6). In high-masculinity cultures,ender roles are more sharply differentiated, showing ‘‘aap between men’s-values and women’s-values’’ (Hofstedend McCrae, 2004, p. 64). Gender researchers (Manolovat al., 2002) propose gender influences on entrepreneurs’otivation in business performance, and growth expec-

ations (Davis and Shaver, 2012). However, the studiesnalyzed link gender (as variable) but not masculinityr femininity as cultural dimensions to entrepreneurialecision-making (Seuneke and Bock, 2015; Dean and Ford,017; Addo, 2017). Gender attributes thus do not influenceffectual and causal logic. Based on the foregoing, we pro-ose the following hypothesis:

7. A culture characterized by masculinity does not inten-ify the relationship between the entrepreneur’s socialdentity and the use of effectual and causal logic.


ong-term orientationong-term orientation [LTO] stands for the fostering ofirtues oriented towards future rewards, in particular, per-everance and thrift. Its opposite pole, STO, stands for the


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ostering of virtues related to the past and present, in par-icular, respect for tradition, preservation of ‘‘face’’ andulfilling social obligations’’ (Hofstede, 2001, p. 359). Thisimension may be linked to effectual logic via adaptation toxecution, ‘‘[t]aking advantage of contingencies instead ofvoiding them’’ (Dew et al., 2009). When individuals seekersonal security and stability, they work hard to avoid con-ingencies; an adaptable individual is more likely to takedvantage of contingencies. By this logic, LTO influencesntrepreneurs who make decisions based on effectual logicut not those who base decisions on causal logic. We thusropose the following hypothesis:

8. A culture characterized by LTO intensifies the rela-ionship of the entrepreneur’s social identity to the use offfectual logic but does not affect the relationship of thentrepreneur’s social identity to the use of causal logic.

Drawing on the theoretical position formulated here, weow test whether the processes related to effectuation orausality are intensified by the cultural dimensions ana-yzed: avoiding uncertainty, individualism, PDI, masculinity,nd LTO.

ethodology

he study data were drawn from the 2013/2014 ‘‘Global Uni-ersity Entrepreneurial Spirit Students’ Survey’’ (GUESSS)or (Sieger et al., 2014). Over 1.9 million students glob-lly from 759 universities participated in the edition.2 Wesed the project’s international database, which included3 countries.3 The survey was completed by 5076 studentsho had created their own firms. Their average age was 26,1.3% men and 38.7% women. Most firms operated in adver-ising, marketing, and design (25.9%); the sector with lowestarticipation was wholesale and retail commerce (8.1%).xchange students were omitted to provide impartial esti-ators of cultural attributes.

easurement of the study variables

ocial Identityased on the scale validated by Sieger et al. (2016), wenalyze the entrepreneur’s ‘‘frame of reference’’ consid-ring Darwinian (˛ = 0.87), communitarian (˛ = 0.90) andissionary (˛ = 0.92) identity. Since we cannot measure the

ounder’s social identity directly (as it is latent and psycho-ogically abstract), we develop and use a scale (Netemeyert al., 2003; Sieger et al., 2016).


ffectual and causal logichandler et al. (2011) ground the measurement scaleor effectual logic. They validated the measurementsith exploratory and confirmatory factor analysis,

2 In the 2013/2014 edition, the GUESSS Project was coordinatedy ESADE (http://www.guesssurvey.org/).3 Participation in the GUESSS 2013/2014 project extends to 34ountries, but we omitted Liechtenstein because its data are notvailable in Hofstede’s database (2001, 2010).

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emonstrating content, predictive and construct valid-ty. Based on their analysis, effectual logic is a formativeonstruct with three second-order reflective dimensionsexperimentation (˛ = 0.76), affordable loss (˛ = 0.89),nd flexibility (˛ = 0.86)). We advise against including‘preliminary agreements’’ here, as Chandler et al. (2011)nd evidence that they are a sub-dimension shared withausal logic.

The measurement scale for causal logic is also based onhandler et al. (2011). Causal logic is a variable composed ofhree reflective items (˛ = 0.89) that ask the founder aboutis/her decisions to design and plan business strategies,esearch/choose the target market, and analyze competi-ors, as well as design and plan production and marketingtrategies. In this survey, both these questions and thoseelated to entrepreneurial social identity were measuredsing a multi-item scale. Evaluations were captured using

7-point Likert scale (1 = Strongly disagree, 7 = Stronglygree).

ultural dimensionsollowing the theoretical framework, we based our analy-is on the cultural dimensions defined by Hofstede (2001)o analyze the moderation of country in the relationshipetween social identities and effectual and causal logic.

nalysis and results

o analyze the results, we focused initially on the data fromable 1, which displays the mean, standard deviation, andorrelation of the study variables.

After data collection, we validated the measurementnstruments with reliability and dimensionality analysisAnderson and Gerbing, 1988). To evaluate the scales’ initialeliability, we used the Alpha Cronbach, considering 0.7 ashe minimum value (Nunnally, 1978). All items exceeded theinimum threshold for this criterion.To assess the effect of the proposed theoretical model,

e adopted the structural equations method, using the par-ial least squares technique (PLS-SEM) (Fornell and Cha,994) with Smart PLS version 3.0 (Ringle et al., 2015). Var-ous qualities of PLS-SEM have led to its increased use inesearch on topics in management and strategy (Sattlert al., 2010). PLS-SEM is suitable for this study becauset lets us use both formative and reflective scales; struc-ural equations models (SEM) based on covariance structuresave limitations with formative constructs (Henseler et al.,009). Our model used social identities in their threeormative dimensions as independent variables, as theseimensions together determine a founder’s social iden-ity (Sieger et al., 2016); and effectual logic, a formativeonstruct composed of three second-order formative dimen-ions (experimentation, assumable loss, and flexibility)Chandler et al., 2011). When the proposed model includes

second-order construct, the appropriate PLS-SEM methods the hierarchical component model, proposed by Wold (cit.hin et al., 2003).


Our next step is to evaluate validity and reliability ofhe measurement model, confirming whether the manifestariables measure the different theoretical concepts cor-ectly. We performed this confirmation by analyzing the


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as: EstradaCruz,

M.,

et al.,

The infl

uence of

culture on

the relationship

between

the

entrepreneur’s

social

identity

and

decision-making:

Effectual

and

causal

logic.

BRQ

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Culture in

the entrepreneur’s

identity: Infl

uence on

effectuation and

causation

7

Table 1 Correlation among the variables analyzed.

Mean s.d. 1 2 3 4 5 6 7 8 9 10 11

Darwinian identity (1) 4.78 1.53 1 .555*** .516*** .524*** .548*** .359*** −.265*** .031** .004 −.247*** −.036***

Communitarian identity (2) 4.60 1.64 1 .747*** .464*** .449*** .265*** −.213*** −.049*** −.127*** −.157*** .080***

Missionary identity (3) 4.35 1.77 1 .434*** .433*** .342*** −.287*** −.041*** −.088*** −.222*** .063***

Effectual Logic (4) 4.85 1.30 1 .556*** .169*** −.162*** −.051*** −.116*** −.125*** .076***

Causal Logic (5) 4.43 1.85 1 .279*** −.242*** −.043*** −.084*** −.196*** .056***

Power Distance (6) 56.42 23.06 1 −.757*** −.127***−119*** −.396*** −.019Individualism (7) 56.32 21.18 1 .158*** .248*** .345*** −.190***

Masculinity (8) 54.62 21.26 1 .334*** −.058*** −.347***

Uncertainty Avoid (9) 66.27 21.67 1 −.140*** −.409***

LT Orientation (10) 55.79 17.27 1 −.341***

Indulgence (11) 48.35 17.59 1

*p < 0.05; **p < 0.01; ***p < 0.001.



8 M. EstradaCruz et al.

Table 2 Analysis of variables in the measurement model.

Variable First-order factor loading Weight of second-order construct CA CR AVE

Effect. Logic 0.88 0.80 0.58Experimentation EXP1 0.88*** 0.51*** 0.76 0.89 0.81

EXP2 0.92*** 0.59***

Assumableloss

PA1 0.95*** 0.52*** 0.89 0.91 0.78PA2 0.95*** 0.52***

Flexibility FLEX1 0.88*** 0.37*** 0.86 0.95 0.90FLEX2 0.87*** 0.38***

FLEX3 0.89*** 0.36***

CausalLogic

CAUS1 0.89*** 0.89 0.93 0.83CAUS2 0.92***

CAUS3 0.91***

Note: CA: Alpha Cronbach ˛; CR: Composite Reliability; AVE: Average Variance Extracted.*** p < 0.001.

Table 3 Weights of second-order constructs.

Construct/Item No. items Weights t-Value

Experimentation 2 0.497*** 33.93Affordable loss 2 0.330** 32.67Flexibility 3 0.489*** 61.17

svtigtsTv1A(

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Table 4 Weights of formative variables.

Construct Item Weights t-Value VIF

DarwinianIden-tity

IM1 −0.032 1.37 1.51IM2 0.165*** 6.38 1.72IF1 0.226*** 8.41 2.38IF2 0.363*** 12.66 2.40IG1 0.177*** 5.14 3.19IG2 0.298*** 9.91 3.01

CommunitarianIden-tity

IM3 0.163*** 4.09 2.78IM4 0.234*** 6.06 2.81IF3 0.053 1.40 2.62IF4 0.461*** 14.01 1.84IG3 0.228*** 5.31 3.72IG4 0.083** 1.86 3.65

MissionaryIden-tity

IM5 0.180*** 4.20 2.66IM6 0.230*** 5.42 2.71IF5 0.316*** 8.11 2.60IF6 −0.160*** 3.61 3.44IG5 0.394*** 8.86 3.03IG6 0.215*** 4.79 3.11

*p < 0.05; **p < 0.01; ***p < 0.001; VIF < 5 (Hair et al., 2011).

Table 5 Groups performed using hierarchical clusteranalysis.

Group 1 Group 2 Group 3

AUS GER ARG COLCAN HUN AUT MEXDEN ISR BEL MYSENG ITA BRA NGRFIN JPN ESP SINNED LUX ESTSCO POL FRAUSA POR GRE

ROMRUS

*** p < 0.001.

cale’s validity and reliability. To evaluate the items’ indi-idual reliability, we used the indicators’ loadings (�) onheir respective constructs. For Carmines and Zeller (1979),ntegrating an indicator into a construct requires a loadingreater than or equal to 0.7. To test convergent validity ofhe constructs, we analyzed the Alpha Cronbach (˛), Compo-ite Reliability (CR), and Average Variance Extracted (AVE).able 2 presents the ˛ and CR values. For all constructs, thealues are above the required threshold of 0.7 (Nunnally,978; Fornell and Larcker, 1981; Hair et al., 2011) and theVE is above the 0.50 criterion defined by Fornell and Larcker1981).

Table 3 presents the weights of the second-order con-tructs and the associated t-values.

As the independent variables are formative, we proceedo analyze the weights of the items that compose them.able 4 presents this information.

Although some weights are not significant, we believe it isest not to eliminate the items from the model. Since anal-sis of the weight-loading relationship of these indicatorsHair et al., 2014) shows that their corresponding loading isigh (>0.6), eliminating a dimension would alter construc-ion of the scale (Sieger et al., 2016). We therefore believet is best to preserve them.

First, we have analyzed the moderating effect of culturen social identities’ influence on causal and effectual logic.e perform cluster analyses by hierarchical conglomerates

Ledesma-Ruiz et al., 2015; Helstrup et al., 2007) and thense ‘‘inter-group’’ grouping. We then use a dendogramraphic to select tree groups of countries (see Table 5).

Please cite this article in press as: EstradaCruz, M., et al., The influence of culture on the relationship betweenthe entrepreneur’s social identity and decision-making: Effectual and causal logic. BRQ Bus. Res. Q. 2018,https://doi.org/10.1016/j.brq.2018.10.002

In the next step, we perform a multi-group analysis usinghe tool PLS-MGA with a non-parametric focus (Henselert al., 2009). This information is shown in Table 6.

SLOSUI



Culture in the entrepreneur’s identity: Influence on effectuation and causation 9

Table 6 Multigroup analyses.

Variables Group 1 Group 2 Group 3

Darwinian I. --- Effectual L. ˇ = −0.39*** ˇ = 0.38*** ˇ = 0.42***

Darwinian I. --- Causal L. ˇ = 0.45*** ˇ = 0.45*** ˇ = 0.46***

Communitarian I. --- Effectual L. ˇ = 0.15*** ˇ = 0.14*** ˇ = 0.23***

Communitarian I. --- Causal L. ˇ = 0.11* ˇ = 0.07** ˇ = 0.15*

Missionary I. --- Effectual L. ˇ = 0.10* ˇ = 0.11*** ˇ = 0.09†

Missionary I. --- Causal L. ˇ = 0.12*** ˇ = 0.09*** ˇ = 0.05

* p < 0.05.** p < 0.01.

***

vbutreduhcteflfi

bicticro

iuclceflpai

Dtlttat

p < 0.001† p < 0.10.

Table 6 shows substantial differences between groups,especially concerning missionary identity. The culturaldimensions analyzed have no significant effect on founderswith missionary identity in the countries in Group 3, com-posed mostly of countries with developing economies, butthey do have significant influence in the countries in Groups1 and 2. The most significant differences between thegroups’ average dimensions involve Power Distance, Individ-ualism, LTO and Uncertainty Avoidance.

Next, we evaluate the hypothetical model. Since themoderator variable is formative, we evaluate the moderatoreffect using the ‘‘two stage approach’’ (Chin et al., 2003).Table 7 (below) presents the interaction of the moderatoreffect of each identity separately.

In evaluating the variance of the dependent latent varia-bles explained by the constructs that predict them (R2),we see that the model explains a variance higher than 0.1(Falk and Miller, 1992). While analyzing R2 as a criterion ofpredictive relevance, we also applied the sample reuse tech-nique (Q2 through Blindfolding) proposed by Stone (1974)and Geisser (1975). The dependent latent variable Q2 isgreater than 0, indicating the model’s predictive validity.To evaluate the significance of the structural relationships,we applied the bootstrapping procedure (500 samples basedon the original sample).

Table 7 shows the results of the different models. First(Model I). We analyzed the effect of the independent varia-bles on the dependent variable to confirm Hypotheses H1,H2, and H3. Next (Models II---XI), we analyzed the effect ofthe moderator variables separately, as well as their interac-tion with the independent variables.

Our results show that Darwinian, communitarian, andmissionary identities are positively and significantly relatedto causal and effectual logic, even though the t-statisticsindicate very different degrees of relationship. The t-statistic shows that Darwinian identity (ˇ = 0.45, p < .001,Model I) is more closely related to causality and communi-tarian identity (ˇ = 0.12, p < .001, Model I) more significantlyrelated to effectuation. The significances of the relationshipbetween missionary identity and both logics are the same(ˇ = 0.12; ˇ = 0.12, p < .001, Model I). These data suggestthat all three identities combine both logics in responding


to uncertainty of the business environment. Based on thedata, we accept H3 and we partially accept H1 and H2.

From Model II, we introduce moderation that may affectthe relationships described above. The first moderator

tatL

ariable, ‘‘avoiding uncertainty,’’ is inversely related tooth logics, and its moderator effect occurs only throughse of effectuation by communitarian and missionary iden-ities. Thus, as a communitarian entrepreneur’s need toeduce uncertainty increases, he/she decreases use offfectual logic. We conclude that entrepreneurs makeecisions based on causality, in a more planned way,sing a fixed strategy. In the case of missionary identity,owever, the relationship is positive and significant, indi-ating that these individuals use effectual logic to reducehe degree of uncertainty in their country. In the pres-nce of uncertainty, missionary identity tends to be moreexible, attempting to adapt to events to benefit therm.

Individualism affects causal decision-making inversely,ut individualism’s moderator effect is significant andnverse when Darwinians use effectual logic. This resultould indicate that Darwinian entrepreneurs use less effec-ual logic in cultures with high individualism. Although theirdentities focus on achieving economic benefit, the markedultural dimension in this case leads these entrepreneurs toeinforce their strategy through rational logic to achieve therganization’s objectives.

The score for ‘‘distribution of power’’ is based on thendividual’s acceptance of the fact that power is distributednequally. The moderator effect of PDI is positive and signifi-ant when Darwinian and missionary identities use effectualogic. Less hierarchy in institutions and organisms lowers aountry’s score for this variable. Darwinian and missionaryntrepreneurs tend to use experimentation and to be moreexible in decision-making in these situations, in which peo-le receive fewer instructions from higher entities and thusre more open to experimentation and change, adapting tot and transforming possible threats into opportunities.

The dimension LTO intensifies the relationship betweenarwinian identity and use of causal logic, since, accordingo Hofstede and Hofstede (2005), a culture oriented to theong term views the world as constantly changing, requiringhat one always prepare for the future. This result indicateshat Darwinian identities endorse rational decision-makingnd definite plans as means to adapt to change. In contrast,his dimension inversely intensifies the relationship between


he missionary identity and use of effectual logic. Mission-ry identities reduce use of flexibility and experimentationhrough more rational logic to adapt to countries with highTO.


Please cite

this article

in press

as: EstradaCruz,

M.,

et al.,

The infl

uence of

culture on

the relationship

between

the

entrepreneur’s

social

identity

and

decision-making:

Effectual

and

causal

logic.

BRQ

Bus.

Res.

Q

.


AR

TIC

LE

IN P

RE

SS

+Model

BRQ-110;

N

o. of

Pages 19

10

M.

EstradaCruz et

al.

Table 7 Results of the moderator effect.

Model IStandarizedbeta

Model IIStandarizedbeta

Model IIIStandarizedbeta

Model IVStandarizedbeta

Model VStandarizedbeta

Model VIStandarizedbeta

Model VIIStandarizedbeta

Model VIIIStandarizedbeta

Model IXStandarizedbeta

Model XStandarizedbeta

Model XIStandarizedbeta

Darwinian Identity ---Causal L.

0.45*** 0.46*** 0.45*** 0.43*** 0.45*** 0.43*** 0.45*** 0.46*** 0.45*** 0.44*** 0.45***

Darwinian Identity ---Effectual L.

0.37*** 0.37*** 0.38*** 0.37*** 0.37*** 0.37*** 0.38*** 0.37*** 0.38*** 0.37*** 0.37***

Communitarian Identity--- Causal L.

0.08*** 0.07*** 0.08*** 0.10*** 0.08*** 0.10*** 0.08*** 0.08*** 0.08*** 0.09*** 0.08***

Communitarian Identity--- Effectual L.

0.17*** 0.17*** 0.16*** 0.17*** 0.17*** 0.17*** 0.16*** 0.17*** 0.17*** 0.17*** 0.17***

Missionary Identity ---Causal L.

0.12*** 0.12*** 0.12*** 0.10*** 0.12*** 0.10*** 0.12*** 0.12*** 0.12*** 0.12*** 0.12***

Missionary Identity ---Effectual L.

0.12*** 0.12*** 0.11*** 0.12*** 0.12*** 0.12*** 0.13*** 0.12*** 0.12*** 0.13*** 0.13***

Uncertainty --- Causal L. −0.06***

Moderator effectuncertainty *Darwinian I

−0.02

Moderator effectuncertainty *Communitarian I

−0.02

Moderator effectuncertainty *Missionary I

0.005

Uncertainty --- EffectualL.

−0.10***

Moderator effectuncertainty *Darwinian I

0.01

Moderator effectuncertainty *Communitarian I

−0.06***

Moderator effectuncertainty *Missionary I

0.05**


Please cite

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The infl

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social

identity

and

decision-making:

Effectual

and

causal

logic.

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Culture in


identity: Infl

uence on

effectuation and

causation

11

Table 7 (Continued)












Individualism --- Causal L. −0.08***

Moderator effectindividualism *Darwinian I

0.02

Moderator effectindividualism *Communitarian I

−0.03

Moderator effectindividualism *Missionary I

0.02

Individualism --- EffectualL.

0.005

Moderator effectindividualism *Darwinian I

−0.03*

Moderator effectindividualism *Communitarian I

−0.03

Moderator effectindividualism *Missionary I

−0.03

Power distance (PDI) ---Causal L.

0.07***

Moderator effect PDI *Darwinian I

−0.03

Moderator effect PDI *Communitarian I

0.03

Moderator effect PDI *Missionary I

−0.005


Please cite

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The infl

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culture on

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social

identity

and

decision-making:

Effectual

and

causal

logic.

BRQ

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Table 7 (Continued)












Power distance ---Effectual L.

−0.04***

Moderator effect PDI *Darwinian I

0.04*

Moderator effect PDI *Communitarian I

0.02

Moderator effect PDI *Missionary I

0.05***

Masculinity --- Causal L. −0.04***

Moderator effectMasculinity *Darwinian I

0.01

Moderator effectMasculinity*Communitarian I

0.001

Moderator effectMasculinity *Missionary I

0.003

Masculinity --- EffectualL.

−0.04***

Moderator effectMasculinity *Darwinian I

0.01

Moderator effectMasculinity*Communitarian I

−0.01

Moderator effectMasculinity *Missionary I

0.008


Please cite

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The infl

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social

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decision-making:

Effectual

and

causal

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Culture in


identity: Infl

uence on

effectuation and

causation

13

Table 7 (Continued)












LP Orientation --- CausalL.

−0.04***

Moderator effect OLP *Darwinian I

0.04**

Moderator effect OLP *Communitarian I

−0.002

Moderator effect OLP *Missionary I

−0.02

LP Orientation ---Effectual L.

0.01

Moderator effect OLP *Darwinian I

−0.02

Moderator effect OLP *Communitarian I

0.004

Moderator effect OLP *Missionary I

Adjusted R-squaredCausal L.

0.35 0.36 0.35 0.36 0.35 0.35 0.35 0.35 0.35 0.35 0.35

Adjusted R-squaredEffectual L.

0.35 0.34 0.35 0.34 0.35 0.34 0.35 0.34 0.34 0.35 0.34

Q (2) Causal L. 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28Q (2) Effectual L. 0.18 0.18 0.19 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18

Note: VIF < 5 (Hair et al., 2011).* p < 0.05.

** p < 0.01.*** p < 0.001



14 M. EstradaCruz et al.

5

4,5

4

3,5

3

2,5

2

1,5

1

Dep

ende

nt v

aria

ble

Low communitarian I High communitarian I

Low uncertainty avoidance

High uncertainty avoidance

Figure 1 Uncertainty avoidance moderator effect between communitarian identity and effectuation.

5

4,5

4

3,5

3

2,5

2

1,5

1Low missionary identity High missionary identity

Low uncertainty avoidance

High uncertainty avoidance

Dep

ende

nt v

aria

ble

Figure 2 Uncertainty avoidance moderator effect between missionary identity and effectuation.

5

4,5

4

3,5

3

2,5

2

1,5

1Low darwinian I High darwinian I

Low individualism

High individualism

Dep

ende

nt v

aria

ble

Figure 3 PDI moderator effect between communitarian identity and effectuation.

5

4,5

4

3,5

3

2,5

2

1,5

1

Dep

ende

nt v

aria

ble

Low darwinian I High darwinian I

Low PDI High PDI

een

at

Hbeimo(i

til

p(

ue

t(

Ltt

Figure 4 PDI moderator effect betw

Finally, the dimension masculinity does not significantlyffect the relationship between the different social identi-ies and the use of effectual and causal logic.

According to the data obtained, we accept H7, reject8, and partially accept H4, H5 and H6. Since causality isased on prediction and the need to plan----insofar as thentrepreneur’s goal is to establish a plan to achieve an endn whatever way possible, focusing on choice of the righteans to achieve it----it is difficult for the cultural variables

f the entrepreneur’s country to raise or lower this effectcausal logic), since the entrepreneur takes these variablesnto account in design of the planning.


We also performed moderation analysis with a modera-or effect. Figs. 1 and 2 show that uncertainty avoidancenversely moderates the relationship between effectualogic and communitarian identity (ˇ = −0.06, p < .001) and

(

pw

Darwinian identity and effectuation.

ositively moderates effectual logic and missionary identityˇ = 0.05, p < .01)

Fig. 3 presents the inverse moderator effect of individ-alism in the relationship between Darwinian identity andffectuation (ˇ = −0.03, p < .05).

Figs. 4 and 5 show the moderator effect of the PDI inhe relationship of effectual logic to Darwinian identityˇ = 0.04, p < .05) and missionary identity (ˇ = 0.05, p < .001).

Finally, Figs. 6 and 7 show the moderator effect ofTO in the relation between causality and Darwinian iden-ity (ˇ = 0.04, p < .01) and the inverse moderator effect inhe relation between effectuation and missionary identity


ˇ = −0.03, p < .05)To conclude, the R2 levels indicate that the causal model

artially explains the endogenous variables. The model fitsell based on most of the indicators studied.



Culture in the entrepreneur’s identity: Influence on effectuation and causation 15

5

4,5

4

3,5

3

2,5

2

1,5

1D

epen

dent

var

iabl

eLow missionary identity High missionary identity

Low PDI High PDI

Figure 5 PDI moderator effect between missionary identity and effectuation.

Low darwinian I High darwinian I

5

4,5

4

3,5

3

2,5

2

1,5

1

Dep

ende

nt v

aria

ble

Low Lt orientation

High Lt orientation

Figure 6 LTO moderator effect between Darwinian identity and causality.

5

4,5

4

3,5

3

2,5

2

1,5

1

Dep

ende

nt v

aria

ble

Low missionary I High missionary I

Low LT orientation

High LT orientation

een

emittio

gtteespecTda

Figure 7 LTO moderator effect betw

Discussion

This study has analyzed the influence of social identities onuse of causal and effectual logic, as well as the modera-tor effect of some cultural dimensions in this relationship:avoiding uncertainty, individualism, PDI, masculinity, andLTO. The study was contrasted using a sample of 5076 stu-dents who had created their own new ventures.

As to the relationships in the first model, our empiricalevidence shows a significant relationship among the differ-ent social identities, causality, and effectuation, helpingto confirm that entrepreneurs with very different identi-ties may face very diverse situations when managing a neweconomic activity, a condition that requires making deci-sions based on planning and action. Some studies (e.g.,Smolka et al. (2016)) propose that planned reasoning worksbetter in decisions involving predictable results, while effec-tual reasoning is better applied in situations of uncertainty.Founders who use different logics in decision-making seem,however, to obtain better performance.

Based on the moderator effect of the cultural dimensions


analyzed, this effect is significant in the case of effectuallogic in most of the models analyzed. However, use of causallogic is only affected by the dimension LTO.

obo

missionary identity and effectuation.

The case of communitarian identity shows an inverseffect in the dimension ‘‘avoiding uncertainty.’’ Since com-unitarian identity focuses on serving the community with

nnovative products, it uses less flexibility and experimen-ation in societies with higher avoidance of uncertainty. Inhis case, communitarians tend to use predefined plans, fullnformation, and a general view of the impact of the productn the community.

Missionary identity is characterized by focus on aoal, advancing a social cause. Acting responsibly ishe fundamental goal of such firms. For this iden-ity, ‘‘avoiding uncertainty’’ has a positive moderatorffect on use of effectuation, reaffirming the hypoth-sis that such entrepreneurs seek to make significantocial contributions by adopting business models thatrovide creative solutions in uncertain markets. Mitchellt al. (2000), among others, confirm that decisions asso-iated with creating a firm vary from culture to culture.hese decisions include protection of the knowledgeeveloped, access to resources, good will (e.g., toler-nce for commitment and motivation), and recognition of


pportunity----all associated with decisions linked to newusiness ventures, both individually and in interaction withthers.


IN+ModelB

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The relationship of PDI is also significant and intensifiesecisions involving effectuation. We deduce that adop-ion of creative decisions intensifies because missionaryntrepreneurs focus on tackling complex social problems.inally, this identity is inversely moderated by LTO. Thisesult confirms that missionary identity uses the new ventures vehicle to achieve its social and/or environmental goalshrough effectual or causal logic depending on the situation.ountries with more marked LTO tend to use effectual logic

ess to achieve their goals.As mentioned above, Darwinian identity, whose ultimate

oal is to obtain classic benefits, is influenced by PDI ints relation to effectuation. We confirm that this culturalimension influences effectual decision-making. Some stud-es (Mitchell et al., 2000) find that this dimension influencesrrangement, ability, and behavior cognitions, which in turnffect decisions to start up. The relationship of this iden-ity to causality is influenced by LTO, a dimension orientedo obtaining future rewards and perseverance, conditionsloser to the use of pre-established plans, security, and per-onal stability.

Finally, we conclude that ‘‘masculinity’’ has no signifi-ant effect on the relationships among the different socialdentities and the use of effectual and causal logic.

The results obtained imply that Hofstede’s culturalimensions----avoiding uncertainty, individualism, PDI, mas-ulinity, and LTO----are important to the debate effectuation-ausality debate. Our study focuses on 33 countries whoseimensions differ greatly and obtains significant effects inhe processes used. These findings indicate that the scoresn these dimensions are related to specific social identitiesnd their use of effectual logic.

onclusions

his paper sought to answer the primary question of how theifferent social identities use effectual or causal decision-aking and whether national culture can influence this

elationship. Through a social identity perspective, we showhat Darwinian identity alone has a stronger effect onffectual than on causal reasoning. This result implies thatarwinians focus on their entrepreneurial and planned goalss their main motivation. This is the only identity in whichse of causal logic is influenced by LTO. Even when we con-ider predefined plans and certainty, these entrepreneursntensify their decisions in countries whose cultures are ori-nted to and prepare for the future.

For communitarians, the basic social motivation asounder is to support and be supported by a community. Forhese founders, the means proposed by Sarasvathy (2001)re fundamental to effectual logic: identity and social net-ork. This finding helps us to confirm a stronger tendency

o use effectual logic in decision-making. Since this typef founders’ primary reference group is their communityFauchart and Gruber, 2011), national culture influencesheir identity as entrepreneurs, including their social net-ork. For communitarians, uncertainty avoidance deserves


pecial attention, as product innovation is the center of theirusiness process. Cultures with higher scores in this dimen-ion could inversely influence their decision making fromffectual logic.

iseF


Finally, as the model data show, missionary founders useausal and effectual logic in a complementary way. This find-ng supports the assertion that missionary identity focuses itsfforts on a very specific goal when it faces highly uncertainarkets. Such founders’ use of effectual logic is intensifiedy distance from power and uncertainty avoidance. Thomasnd Mueller (2000) find that entrepreneurs in cultures withittle uncertainty are more likely to exploit any relation-hip based on trust, whereas entrepreneurs in a culture withigh impact in this dimension are more likely to persist inelationship-based trust, despite the threat perceived in thenvironment. This conclusion supports Fauchart and Gruber2011), who affirms that such founders only commit to sup-liers with the same type of identity as themselves.

This study advances knowledge of the entrepreneurialhenomenon based on the individual’s identity----not onlyn the type of opportunity he/she exploits or the pur-ose of entrepreneurship. It also helps us to confirm thathe entrepreneurial phenomenon is complex and requireseeper study of individuals and their sociological character-stics.

These results yield implications with potential for use inoth theory and practice.

First, we introduce the influence of culture in the fieldf effectuation and causality. Perry et al. (2012) recom-ended exploring the relationships between effectual logic

nd established cultural tendencies to deepen understand-ng of the next stage of development of this field. Second,he results show that culture moderates communitarian andissionary and Darwinian identities in their relationships

o effectuation in most of the cases studied. Thus, ele-ents of effectual reasoning are used by all business owners,

re not influenced by culture, and differ among countries.ntrepreneurs should thus consider the possible influence ofational culture on decision-making. The potential negativenfluence of national culture on use of effectuation couldndicate that it is better to use causal logic.

Third, this study develops the relationship between theifferent social identities and cultural dimensions, since,s mentioned in the theoretical framework, an individual’sdentity is connected to his/her national culture of originBerger, 1991). In analyzing validation of the scale used inhis study, Sieger et al. (2016) conclude that entrepreneurs’ultural traits may influence their social identities and rec-mmend further research on this issue.

These findings have various implications for practice.irst, the study results suggest that culture should be takennto account as a factor in entrepreneurship training. Thistudy concludes that only individuals with specific socialdentities are influenced by uncertainty, individualism, dis-ribution of power, and LTO.

Second, the results of study influence how entrepreneursace decision-making in their own countries and how theyhould make decisions when entering foreign markets, anncreasingly common option due to the decreasing price ofew information and communication technologies.

Despite these contributions, our study has limitationshat open new research opportunities. The first limitation


nvolves the sample. We analyze firms created by universitytudents and do not include, for example, the role of expertntrepreneurs in the study of causal and effectual decisions.uture studies should analyze experienced entrepreneurs


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to confirm the implications of experience for decisions andcultural dimensions. The second limitation involves controlvariables, as the study would be enriched by their introduc-tion. Future studies should include variables such as age,sex, and activity sector to gain fuller knowledge of theirimplications.

The third limitation is the transversal design of theresearch, which prevents strict causal inferences. Futureresearch could undertake new empirical studies based onlong-term designs to obtain new evidence to improve under-standing of the influence of identities on the different stagesof the business process.

Interesting future lines of study include deepening under-standing of the second-order dimensions that composeeffectual logic and analyzing how each dimension is influ-enced by the different cultural dimensions. Other lines ofstudy could analyze dimensions not considered here throughcomparative study of countries with opposing dimensions.Such analyses could help us to develop fuller knowledgeof the individual culture of each entrepreneur and how itinteracts with causal and effectual decisions.

Funding

This research has been supported by the Spanish ‘‘Ministeriode Economia, Industria y Competitividad’’ (Ref.: ECO 2013-45885-R and ECO2016-80677-R).

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